Following the final day of formal hearings in India regarding the central bank’s ban on businesses and individuals that transact Bitcoin and other cryptocurrencies, the supreme court has decided to rehear arguments on September 25th, leaving the door open to a new stance on digital assets.
The Reserve Bank of India (RBI) has now been granted time to reconsider the crackdown on crypto it initiated in April 2018 when it released a circular prohibiting regulated entities such as banks and financial institutions from servicing crypto clients.
According to Justice Nariman,
“Exchanges are not asking to uplift the ban but they are only asking to reconsider. If you don’t give answer to it, I will pass the judgement.”
The case, IAMAI v. RBI, has focused on RBI’s legal authority to prohibit banks from servicing clients who use cryptocurrencies. Advocating on behalf of crypto exchanges and other related business, the Internet and Mobile Association of India (IAMAI) has argued that RBI’s circular against private companies was unconstitutional.
According to IAMAI counsel Ashim Sood,
“RBI cannot step out of its powers as set out in the Banking Regulation Act. Therefore, its action against private businesses in the form of a circular is illegal.”
India’s crackdown has forced blockchain developers to flee and major exchanges such as Zebpay to relocate to crypto-friendly jurisdictions such as Malta where lawmakers have laid out clear regulatory guidelines to support the growth of the industry.
IAMAI claims that the central bank banned crypto on “moral grounds” without presenting research on how cryptocurrencies would impact the economy.
As today’s hearing unfolded, evidence of research became a major focus as the judge also challenged RBI’s concern for consumer protection, noting that addressing concern and enforcing protection is not the RBI’s concern.
Reports media outlet Crypto Kanoon, which chronicled the case from the courtroom,
“The judge interrupts and asks how you [RBI] are concerned with consumer protection, it is not your concern. It is [the] government’s concern and not yours.”
The RBI defended its decision to ban crypto by referencing a report by the interministerial committee (IMC) that innumerates its disadvantages.
Reports media outlet Crypto Kanoon, which chronicled the case from the courtroom,
“Various portions of IMC report are being read to prove that the RBI decision is based on well-substantiated research. The judge asks for various reports mentioned in the IMC report which the government claims as confidential. Consequently, the Judge immediately calls the Solicitor General…
The counsel mentions various advantages of Crypto laid down in FATF. but finally concludes that its ability to be used for cross border payments is something which can potentially undermine monetary policy…
Example of Silk Road online black market for selling illegal drugs is being taken to prove the potential risks of cryptocurrency to be used in illicit activities…
Example of TOR (The Onion Router) has been taken to emphasize the point of potential risks involved in crypto…
At page 59 and 60 of the counter affidavit, the counsel starts reading the incidents of hacking happened with various exchanges worldwide and publications regarding these incidents.”
Despite arguments, the court did not hear sufficient information.
Reports Crypto Kanoon,
“After hearing arguments we are of the view that detailed representations by exchanges pursuant to this court’s order 17.05.2018, have not been answered point by point, therefore RBI to reply [to] them within 2 weeks. [Solicitor General] to furnish various docs within 1 week.”
You can check out the full thread of the court hearing chronicled by Crypto Kanoon here.
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